Execution of documents: Interpretation of the natural and ordinary meaning of contractual terms (Northwood Solihull Ltd v Fearn and others – 2020)

Whether statutory notices served by corporate landlords should be executed as documents in accordance with company law, and what constitutes valid signature.

The background

In Northwood Solihull Ltd v Fearn and others [2020], the landlord had let a residential property to tenants under an assured shorthold tenancy. The tenants had paid a deposit which was protected under the Tenancy Deposit Protection Scheme. The tenants later defaulted on their rent, and the landlord brought a claim for possession, receiving a possession order.

The tenants appealed the order, asking whether the notice and the confirmatory certificate had to be executed by the landlord company in accordance with the Companies Act 2006 s.44. The Act states that execution by a company should be made by two authorised signatories or a director signing in the presence of a witness. The notice in this case had only been signed by the landlord’s property manager.

The decision

The High Court dismissed the appeal, finding in the landlord company’s favour. The notice had not been defective. The Court found that the Act did not apply to the notice seeking possession and that this document was therefore valid. Interpreting s.8 of the Housing Act 1988, the Court found no express requirement for the notice to be signed ‘by’ the landlord; the notice could be validly signed by an authorised signatory outside the requirements of the Companies Act.

The Court then considered a cross-appeal by the landlord in respect of the confirmatory certificate. The certificate had not been executed in accordance with the Companies Act, having only been signed by a director of the landlord company. The Housing Act required the certificate to be signed ‘by’ the party serving it, with the confirmatory certificate bringing formality to the process. It was therefore correct to find that the certificate had not been validly signed. Further, the Court rejected the argument that the certificate was therefore ‘substantially to the same effect’ as that executed in accordance with the Companies Act. The certificate had either been signed correctly or not; it could not be ‘substantially’ compliant.

Advice and action

Although this decision was achieved in the landlord’s favour, landlords are always advised to take advice prior to service of any notice to ensure all statutory procedures are followed, including correct execution of documents.

The Housing Act does not prescribe how the notice was to be executed, and therefore execution by an authorised signatory was sufficient in this case. However, the confirmatory certificate had not been validly executed and there was no room for manoeuvre given by the Court here.